Gemplus Plans RFID Reentry

Jun 16, 2003—Just three years after selling its RFID hardware business, European smart card specialist Gemplus International is already considering ways to reenter the market.

Alex Mandl

“We know it’s a really competitive environment and know there are players out there that have worked on this space in an aggressive way, but we believe we can participate in that market and bring our know-how and our experience into this space,” says Alex Mandl, CEO at Gemplus, which is based in Luxemburg.

That will mean returning to a technology that the company left behind in 2001 when it sold its RFID division, which made 13.56 MHz chips, tags, readers and antennas, to AXA Private Equity. AXA now operates the business as Tagsys. “RFID was a business Gemplus was in before, but they sold it, which, I think, may not have been the best decision,” says Mandl, who joined the company a year after the sale.

Although Gemplus’s renewed interest in RFID is still in its early stage, Mandl says the company will deliver a complete platform —not just look to add its smart card technology to other vendors’ RFID offerings—and will look to leverage its secure-systems’ experience with any RFID product it develops. “Broad applications, such as contactless systems for keeping track of containers and goods as they are shipped around the world, that’s certainly an interesting business, and it is at least part of our research and focus of what we might do in the future,” says Mandl.

Around 65 percent of Gemplus’ revenues come from sales in the telecommunications market. Most of that telecom-derived revenue comes from sales of Gemplus’s Subscriber Identity Module (SIM) cards. Commonly used in a GSM cell phones, a SIM card, like other types of smart cards, contains a microchip. In the SIM card the chip is used to store data, including as the identity of the cardholder, and to encrypt voice and data transmissions. That market will remain the key focus of the company’s investment in research and development.

In addition to its focus on telecommunications, Gemplus has developed a number of newer applications for its smart card technology. In the financial services market, Gemplus has developed smart cards and supporting hardware and software for a new generation of credit cards. Its technology is also used in smart card-based retail applications, including loyalty cards, services, card-management systems, systems integration and data-management systems. But the greatest growth over the next few years, Mandl believes, will be in sales of its smart cards in ID and security applications for government such as identity cards and driver’s licenses and for enterprise and business-to-business security applications.

Mandl says that financial services and security and ID applications represent markets in which RFID is also set to play a role. “We think RFID will be a factor, as it does cut across those various applications,” says Mandl.

Despite his enthusiasm for the technology, however, Mandl insists that RFID development at the company is not a quick process and that the company’s strategy and technology is a few years away from full development.

“I’m not saying its our top priority, but its certainly on our radar screen and may be developed over the next couple of years,” says Mandl, adding that the company has “no RFID product now. It’s in development, but no firm dates have been set for rollout.”

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